New EU law risks giving leeway for labour exploitation and greenwashing

New law could exclude 99 percent of companies and could fail to protect workers, including children, from labour exploitation.  

EU lawmakers risk letting fossil fuel financiers, greenwashers, and companies violating labour rights off the hook under new European due diligence rules.  

EU negotiators – representatives from EU countries, the European Parliament and the European Commission – will meet on Wednesday 13 December to hammer out the final details for an agreement that risks leaving major corporate abuses unchecked.  

The proposal from EU countries grants a carve-out for banks, investors and insurers bankrolling human rights violations and destructive ventures. Financial sector giants will be exempt from scrutinising their investments and loans, despite mounting evidence linking them to companies harming people and the planet. For instance, ING and Société Générale are among the top 5 European biggest financiers of the mining giant Glencore, whose toxic mining activities displaced thousands of people and caused hundreds of thousands to suffer from respiratory symptoms in Colombia and Peru. 

The world’s biggest polluters risk escaping responsibility for the impacts of their emissions as EU countries are pushing to grant leeway for greenwashing. This means companies like Shell will only be required to outline, and not implement, their climate transition plans. 

“The compromise proposal put forward by EU countries staggers at the starting line. Some European governments and political groups echo the regressive corporate lobby’s tune in the negotiating room. But they can still make sure this game-changing law does not become a carte blanche for greenwashers and rogue companies”, said Oxfam EU’s Economic Justice Policy Lead, Marc-Olivier Herman.  

The law, as proposed, could exclude more than 99 percent of European companies, applying only to the largest ones. But size is not equivalent to risk. Sectors notorious for labour exploitation, like the agriculture or garment sector, could slip through the cracks, as 99 percent of them do not reach the 250-employee threshold to fall within the scope of this law. For instance, the current proposals fail to protect migrant women working in exploitative conditions in the Spanish fruit sector. 

In sectors like the coffee industry, companies buy from farmers who are paid below production costs. EU countries do not want to force these companies to take steps to address this issue. The proposal from EU countries also fails to protect children from various forms of child labour, as it only holds companies accountable if the child is below the compulsory schooling age, which means that in some countries 12-year-olds fall between the cracks. 

If the EU countries’ proposal prevails, survivors of corporate abuse will continue to face major obstacles in seeking justice as the proposal does not force companies to disclose crucial information. For example, people affected by Repsol’s oil spill in Peru face an uphill battle for justice with the company refusing to disclose key evidence. They will face the same hurdles under the EU countries' proposed law. 

“EU parliamentarians must hold their ground and ensure this law goes beyond words on paper. As we edge closer to the European elections, the EU has a once-in-a-generation opportunity to set a precedent for ethical business conduct”, said Herman.